Large Caps Outperform on a Solid Down Day
By
Rennie on Thursday, May 14th, 2009 at 2:48 am
Stocks closed sharply lower Wednesday in a surprisingly weak session. Institutions were active sellers, with our TICKscore indicator settling at -40 and Cumulative TICK ending just below -100,000. It looks as though the 20-day moving average of the Cumulative TICK has put in a top, given that a pair of +100,000 readings is set to fall off the average in the days ahead. That will make it difficult for the average to reclaim that May 6th top anytime soon, suggesting price could have a similarly tough time closing above the May 6th SPX close at 919 over the intermediate-term. On the downside, intermediate-term indications discussed recently point to an area of support in the low 900′s. If the market can rally back into that area over the next couple of days, I would expect to see range-bound trade heading into Memorial Day.
Note from the TICKscore chart that today represented only the fourth session since the March bottom in which there was significant institutional selling. Previous occurrences were March 20th, March 30th and April 20th. In each of those cases, there was no follow-through on the downside. We’ll want to see if the market behaves in a similar manner this time around.
No new setups triggered, but interesting to note the outperformance by the OEX (S&P100) relative to the SPX during Wednesday’s selloff. Relative strength among large cap issues tends to be a positive sign for the market short-term. In the table below is each of the last thirty instances in which the S&P closed down 1%+ and the OEX outperformed by 0.3% or more…
SPX Down 1%+, OEX outperforms by >0.3%
05/13/09? ???
04/27/09? Higher SPX close two sessions later
03/02/09? Higher SPX close two sessions later
01/22/09? Higher SPX close one session later
01/20/09? Higher SPX close one session later
01/12/09? Higher SPX close one session later
12/22/08? No higher SPX close within two sessions
12/11/08? Higher SPX close one session later
12/01/08? Higher SPX close one session later
11/20/08? Higher SPX close one session later
11/14/08? No higher SPX close within two sessions
11/11/08? Higher SPX close two sessions later
10/27/08? Higher SPX close one session later
10/22/08? Higher SPX close one session later
10/15/08? Higher SPX close one session later
10/02/08? No higher SPX close within two sessions
09/09/08? Higher SPX close one session later
07/02/08? Higher SPX close one session later
03/10/08? Higher SPX close one session later
12/11/07? Higher SPX close one session later
07/21/04? Higher SPX close one session later
06/09/03? Higher SPX close one session later
10/09/02? Higher SPX close one session later
01/04/01? No higher SPX close within two sessions
01/11/00? Higher SPX close two sessions later
08/10/99? Higher SPX close one session later
10/07/98? Higher SPX close two sessions later
04/07/98? Higher SPX close two sessions later
03/13/97? Higher SPX close one session later
04/02/93? Higher SPX close one session later
04/19/91? No higher SPX close within two sessions
In 25 out of 30 cases, or 83% of the time, the S&P posted a subsequently higher close within the next two sessions. That’s not significantly better than the 66% at-any-time odds for a higher S&P close within the next two days, but it does hint at the potential for a bounce.
Large Caps Outperform on a Solid Down Day
By Rennie on Thursday, May 14th, 2009 at 2:48 amStocks closed sharply lower Wednesday in a surprisingly weak session. Institutions were active sellers, with our TICKscore indicator settling at -40 and Cumulative TICK ending just below -100,000. It looks as though the 20-day moving average of the Cumulative TICK has put in a top, given that a pair of +100,000 readings is set to fall off the average in the days ahead. That will make it difficult for the average to reclaim that May 6th top anytime soon, suggesting price could have a similarly tough time closing above the May 6th SPX close at 919 over the intermediate-term. On the downside, intermediate-term indications discussed recently point to an area of support in the low 900′s. If the market can rally back into that area over the next couple of days, I would expect to see range-bound trade heading into Memorial Day.
Note from the TICKscore chart that today represented only the fourth session since the March bottom in which there was significant institutional selling. Previous occurrences were March 20th, March 30th and April 20th. In each of those cases, there was no follow-through on the downside. We’ll want to see if the market behaves in a similar manner this time around.
No new setups triggered, but interesting to note the outperformance by the OEX (S&P100) relative to the SPX during Wednesday’s selloff. Relative strength among large cap issues tends to be a positive sign for the market short-term. In the table below is each of the last thirty instances in which the S&P closed down 1%+ and the OEX outperformed by 0.3% or more…
SPX Down 1%+, OEX outperforms by >0.3%
05/13/09? ???
04/27/09? Higher SPX close two sessions later
03/02/09? Higher SPX close two sessions later
01/22/09? Higher SPX close one session later
01/20/09? Higher SPX close one session later
01/12/09? Higher SPX close one session later
12/22/08? No higher SPX close within two sessions
12/11/08? Higher SPX close one session later
12/01/08? Higher SPX close one session later
11/20/08? Higher SPX close one session later
11/14/08? No higher SPX close within two sessions
11/11/08? Higher SPX close two sessions later
10/27/08? Higher SPX close one session later
10/22/08? Higher SPX close one session later
10/15/08? Higher SPX close one session later
10/02/08? No higher SPX close within two sessions
09/09/08? Higher SPX close one session later
07/02/08? Higher SPX close one session later
03/10/08? Higher SPX close one session later
12/11/07? Higher SPX close one session later
07/21/04? Higher SPX close one session later
06/09/03? Higher SPX close one session later
10/09/02? Higher SPX close one session later
01/04/01? No higher SPX close within two sessions
01/11/00? Higher SPX close two sessions later
08/10/99? Higher SPX close one session later
10/07/98? Higher SPX close two sessions later
04/07/98? Higher SPX close two sessions later
03/13/97? Higher SPX close one session later
04/02/93? Higher SPX close one session later
04/19/91? No higher SPX close within two sessions
In 25 out of 30 cases, or 83% of the time, the S&P posted a subsequently higher close within the next two sessions. That’s not significantly better than the 66% at-any-time odds for a higher S&P close within the next two days, but it does hint at the potential for a bounce.